Press Releases

Thanks to a stable job market and solid consumption, the German economy is experiencing a moderate upswing. The GDP is expected to increase by 1.9 percent this year, 1.4 percent in 2017, and 1.6 percent in 2018, according to the Gemeinschaftsdiagnose (GD, joint economic forecast)that was prepared by five of Europe’s leading economic research institutes on behalf of the Federal Government. The most recent GD, which was released in April, predicted a GDP growth rate of 1.6 percent for 2016 and 1.5 percent for 2017.

Availability for full-time work still a prerequisite for climbing the career ladder in all sectors

Overall, women in Germany have considerably lower odds of holding a senior management position than men, particularly in the financial sector. These are the findings of a study conducted by the German Institute for Economic Research (DIW Berlin) based on data from the Socio-Economic Panel (SOEP) study for 2001 to 2014. Although the financial sector has a comparatively high number of senior management positions, this is a structure that primarily benefits men. According to DIW Berlin’s Research Director Gender Studies, Elke Holst, one of the biggest career barriers faced by women is their tendency to more frequently work part-time. “Companies still prefer management positions to be full-time,” says Holst. “If we don’t want flexible working time models to end up being career killers in the rush hour of life, a change in mentality is required.”

DIW Berlin short-term economic forecast: German GDP will increase by 1.9 percent in 2016, 1.0 percent in 2017, and 1.6 percent in 2018 – Brexit decision temporarily hindering growth – unemployment continues to fall, but wage increases are also slowing down – public budgets will end all three years with surpluses

According to the latest economic forecast from the German Institute for Economic Research (DIW Berlin), a temporary slow-down is expected for the German economy. Although this year’s GDP is expected to increase by 1.9 percent due to a surprisingly strong start into the year the consequences of June’s Brexit decision are likely to be felt during the winter months, thus dampening Germany’s economic growth. This also contributes to a lower growth rate for 2017: estimates put this figure now at 1.0 percent. As well, 2017 will have three fewer working days than 2016 – and this alone will dampen growth by four-tenths of a percentage point.

Social scientists and economists at DIW Berlin and Humboldt University Berlin researched the integration of refugees who arrived in Germany between 1990 and 2010 – survey data indicate difficult starting conditions with employment and language skills compared to other migrants, but refugees were able to catch up over time

How can we help refugees to successfully integrate into Germany society – especially those migrants who’ve arrived as part of the major influx from the past two years? In order to answer this question, a group of social scientists and economists at the German Institute for Economic Research (DIW Berlin) and Humboldt University Berlin took a look into the recent past. Their key finding: after initial difficulties, refugees who came to Germany between the years 1990 and 2010 were eventually able to catch up to other migrants in terms of employment and language skills.

DIW Berlin study shows that Brexit vote-related uncertainty will do considerable damage to the European and German economies in a way that will be noticeable even two years from now – since the German economy is primarily affected by sinking business investment, policy should be more oriented toward promoting investment

Uncertainty plays a major role in the economy overall – but what are the consequences when financial markets, businesses, and consumers are affected all at once, as in the case of the recent Brexit vote? The German Institute for Economic Research (DIW Berlin) sought to answer this question by isolating the effects of the Brexit vote-related uncertainty shock using a counterfactual analysis. (The authors emphasize that the study should not be considered an economic forecast.) The result: even after several months, the impact of the unexpected Brexit vote outcome will still be noticeable in GDP, unemployment, and the consumer price index. According to the model calculation, euro area GDP will be roughly 0.2 percent lower eight months from now. Due to its openness and dependence on trade, the German economy will be even more strongly affected: in this case, GDP will be 0.4 percent lower.The consensus among the experts: “Even after two years, GDP will still be below the level that would have been in a no-shock scenario.”

Brexit putting a strain on trade and dampening investment across the globe – German economy likely to be affected – uncertainty about exports – investment will be restrained, and both income and consumption will lose momentum

Due to the Brexit decision, the German economy is expected to grow by 0.1 percentage points less this year and by 0.3 percentage points less next year than previously forecasted. This is the result of an updated forecast prepared by the experts at the German Institute for Economic Research (DIW Berlin) based on calculations by the National Institute of Economic and Social Research (NIESR) in London.

DIW Berlin’s experts identified the city’s untapped potential and formed recommendations based on a comprehensive study of its labor market, startup culture, and public investment patterns. The result: good potential, but productivity is low and innovation is weak. Overall, Berlin needs more fast-growing companies.

Has Berlin turned a corner? After a long period of stagnation, the city is on a stable growth path. Economic performance, employment, and population are growing at above-average rates for the first time in years, and unemployment is gradually decreasing. Nevertheless, the unemployment rate is still above the national average, and Berlin is stagnating when it comes to productivity and corresponding income levels.

“Berlin is the only capital in Europe whose productivity and per-capita income falls below the national average,” explains Marcel Fratzscher, President of the German Institute for Economic Research (DIW Berlin). “In recent years, Berlin has awakened from its slumber. There could be many prosperous decades up ahead – but policy needs to be more strongly oriented to making better use of the city’s enormous potential.”

A number of measures are needed for this transformation, emphasizes Martin Gornig, a DIW Berlin specialist in regional economy: “Among other things, we need to improve the growth conditions for young companies, strengthen the potential labor force’s share of workers with intermediate qualifications, and above all, implement the planned infrastructure expansions.”

These and further recommendations for action are derived from multiple new DIW Berlin studies on Berlin’s economy that focus on the labor market, startups, and public investment.

According to the German Institute for Economic Research (DIW Berlin), the uncertainty introduced by the results of the Brexit referendum could noticeably negatively impact on the German economy, resulting in a growth number for next year significantly lower than expected. In particular, the uncertainty about the UK’s economic prospects increased after the referendum, as mirrored in a flight to as safe perceived British government bonds, as well as major fluctuations in the equity markets. As a consequence, British companies are not only likely to hold back with investments, but also to delay or cut-back their plans regarding the creation of jobs—especially since they will presumably start having to take poorer financing conditions into account. This should dampen economic growth in the UK, thus limiting export opportunities for German companies as well.

DIW Berlin forecast: GDP is expected to increase by 1.7 percent this year and 1.4 percent next year – consumer spending still a growth driver, but expanding with less momentum than before – global economy failing to gain traction – Brexit would significantly hinder growth

According to the German Institute for Economic Research’s new summer forecast, the German economy—backed by solid domestic activity—will continue its uptrend, and is expected to grow by 1.7 percent this year.

This figure is one tenth of a percentage point higher than DIW Berlin predicted in the spring forecast, and this change is due to the surprisingly strong first quarter: industrial production grew unexpectedly strongly, employment increased markedly, and wages are noticeably higher, with the result that consumer spending is on the rise. Energy prices are increasing again, however, which is dampening real income. Because significantly fewer refugees are coming to Germany than had been predicted in previous forecasts, the positive economic impulses associated with migration are expected to be smaller, especially in the coming year. GDP growth will slow down somewhat in 2017—to 1.4 percent—primarily due to the fact that there are fewer workdays next year than this year.

Private companies’ overall R&D investment continued to grow between 2011 and 2013. At the same time, companies that are predominantly foreign-owned invested less in R&D than they did in previous years; in contrast, domestic companies spent more on R&D and bulked up their R&D personnel accordingly. These are the results of a new study conducted by the German Institute for Economic Research (DIW Berlin).

For their analysis, experts Heike Belitz and Alexander Eickelpasch of DIW Berlin’s Department of Firms and Markets evaluated data (Wissenschaftsstatistik) from the Stifterverband für die Deutsche Wissenschaft (“Wissenschaftsstatistik”) as well as cost structure surveys from the Federal Statistical Office.

The SOEP’s Barometer of Public Opinion on Refugees in Germany examines the population’s attitudes, expectations, and fears—most respondents supported the rights of refugees to remain in the country in accordance with EU law and the 1951 Refugee Convention—but the majority are in favor of refugees returning if the situation improves in their country of origin

The majority of people in Germany agree with current asylum rules. These are the findings of a survey conducted on behalf of the Socio-Economic Panel (SOEP) study based at the German Institute for Economic Research (DIW Berlin). According to the survey, over 80 percent of respondents think it is right to grant asylum to people fleeing armed conflict in their homeland. Two-thirds of respondents were in favor of admitting refugees under the 1951 Refugee Convention. However, support varies, depending on the reason for fleeing. Those persecuted for human rights activism or membership of an ethnic minority can expect a greater willingness to accept them than persecuted labor unionists. Equally, the majority of Germans surveyed (55 percent) were in favor of refugees returning home once the situation in their country of origin had improved and the reason for fleeing no longer pertained.

DIW Berlin conducted two studies on developments in energy supply – private utilities no more efficient than public utilities – consolidation in drinking water sector offers little benefit

More and more cities and municipalities in Germany are once again taking the electricity, gas, and heating utilities into their own hands: between 2003 and 2012, the number of public utilities increased by 17 percent. Yet the number of private utilities increased by 49 percent over the same period—nearly three times as much. These are the findings of a new study conducted by the German Institute for Economic Research (DIW Berlin).

"There is a no evidence that remunicipalization is displacing private energy companies," explains Astrid Cullmann, Research Associate in the Department of Firms and Markets at DIW Berlin. Together with colleagues Maria Nieswand, Stefan Seifert, and Caroline Stiel, Cullmann evaluated newly available data on energy statistics; financial statements from public funds, institutions, and enterprises; and information from the business register. Even the corporate turnover offers no indication of a remunicipalization, and in fact, public utilities have actually lost revenue shares:in 2012 they generated only slightly more than one-quarter of sales in the energy sector, even though they made up the majority of companies.

Please note: this is a corrected version of the original press release.

DIW Berlin study compares proportion of middle-class individuals over time in Germany and US - share declining in both countries - average income has dropped since 2000

The middle class in both the US and Germany is on the decline: according to a study conducted by the German Institute for Economic Research (DIW Berlin), the share of middle-class individuals in the total population sank in both countries by more than five percent between 1991 and 2013. The “middle class” comprises all adults whose total household income—before taxes and social security contributions—falls between 67 and 200 percent of the median, which separates the higher-income half from the lower-income half of the population.

Please note: The original version of Wochenbericht 18, which compares the decline of the middle class in Germany and with that of the United States, contained a calculation error that came about while adjusting standard German reference values to the basis used by the reference study for the US. We apologize for the oversight.

We have recalculated these figures and are re-releasing the corrected Wochenbericht. The revised figures are shown here in bold. Additional explanations of the different measurement methods can be found at the end of this press release.

The key finding of the report remains unchanged: the German and US middle classes are shrinking at roughly the same pace. An application of the method commonly used in Germany and in previous DIW Wochenberichten reveals a similar development. For comparison purposes, the resulting calculations can also be found in the table at the end of this press release.

DIW study: in several European countries prior to 2010, between 27 and 40 percent of households received inheritances or gifts – German tax policy regarding inheritances and gifts riddled with exceptions

High-income individuals are more likely to inherit wealth than are low-income individuals; they also receive significantly larger amounts. Those from privileged social backgrounds are also able to amass more wealth overall, since they have access to higher-paying jobs. This is the result of a new study conducted by the German Institute for Economic Research (DIW Berlin) and commissioned by the Hans-Böckler Foundation. The study appears in the DIWEconomic Bulletin 17/2016.

Businesses in Germany are still investing too little in their manufacturing facilities. As a new study conducted by the German Institute for Economic Research (DIW Berlin) reveals, 2015’s domestic private investment may have only amounted to pre-crisis levels—even though economic output has been considerably higher. This is not the case in other countries: in the US, for example, gross fixed capital investment is now roughly 14 percent higher than it was in 2007. Even in the German manufacturing industry, investment was subdued: gross investment was not even as high as the depreciation of the existing capital stock. “In the long run, this weak private investment can compromise Germany’s productivity and economic performance,” explains DIW President Marcel Fratzscher.

DIW Berlin claims that the US Federal Reserve’s decision to end its zero interest-rate policy has not caused turbulence in financial markets

According to a recent analysis conducted by the German Institute for Economic Research (DIW Berlin), the interest rate lift-off introduced by the US Federal Reserve at the end of last year has not led to distortions in the financial markets. Financing costs in emerging countries like Mexico and Brazil have been only slightly higher since the rate hike; sudden capital outflows or a fire sale of assets failed to materialize, contrary to initial fears; and even interest rates on the US national debt are hardly higher than they were last year.

Greater transparency of the national banks of the euro area would strengthen Eurosystem credibility.

The allegation that the European Central Bank (ECB) is engaging in illegal monetary financing under the guise of ANFA (Agreement on Net Financial Assets) seems to be unfounded—there is simply no evidence for it, claims the German Institute for Economic Research (DIW Berlin) based on their analysis of the national central banks’ balance sheets. But because the data do not clearly refute this accusation either, DIW economists Kerstin Bernoth and Philipp König are advocating for greater transparency: “The fact that the general public has become suspicious of the motives behind the national central banks’ actions carries the risk that monetary policy in the euro area may lose its most important asset: its credibility.”

According to the German Institute for Economic Research (DIW Berlin), the German economy is expected to grow by 1.6 percent this year, despite a gloomy global economy. This prognosis is similar to the one made in December 2015. As was the case last year, consumer demand is contributing significantly to this growth: more and more people are taking on employment, and wages are rising noticeably. These factors, as well as the purchasing power gains due to the low energy prices, are fueling private consumption. As well, the expenditure on the care, accommodation, and integration of the refugees is also increasing consumption. However, investment in equipment and machinery has been extremely modest, and has actually experienced some decreases recently. From the spring onward, demand for German exports is likely to increase among many foreign markets. Overall, however, the global economy is exhibiting weak development: this year, global economic output is expected to grow by only slightly more than three percent, which is the slowest it has been since the financial crisis in 2009 (as was the case last year). Many emerging countries that export raw materials are still struggling with low oil prices, and the growth path of the Chinese economy is currently not very promising.

SOEP special analysis for International Women's Day (March 8) reveals that the gender-based division of household labor persists – DIW Research Director Elke Holst calls for stronger, fairer division of unpaid work in the household among couples – a family working-time benefits model (Familienarbeitszeit) and daycare expansion would also support this development

On average, women in dual-income households in Germany are doing more housework and spending more time on childcare than their partners are—even if the woman is working full time. This is the result of a recent study conducted by the German Institute for Economic Research (DIW Berlin) to mark International Women's Day on March 8.